Edward And Lisa McCaffrey v. Great Northern Insurance Company
The United States District Court for the District of Colorado granted an insured’s motion for vacation of appraisal decision due to the umpire’s improper limitation of the scope of damages considered during the proceeding. The insured discovered water damage due to defective construction materials and submitted a claim with their insurer, Great Northern Insurance Company, which ordered testing to be conducted to determine the extent of the damages. This testing further damaged the home. Great Northern agreed that the damage caused by the testing was covered, but contested coverage for the underlying water damage. This claim eventually led to an appraisal proceeding, where the umpire limited his assessment to only the damages caused by the testing and did not consider the water damage to the home. The District Court ruled that vacation of the appraisal award was warranted because the umpire improperly limited the scope of his decision. The court reasoned that that allowing an umpire to unilaterally determine the scope of the damages of his or her appraisal as they did here would force the umpire to consider the competing coverage opinions of insured and insurer, which is outside the role of the umpire as determined by the policy.